The Hong Kong has developed a modern financial infrastructure that handles the due diligence and business requirements of today's banks and trust companies, starting with the Banks and Deposits Companies Act of 2000 and continuing with amendments to the Act in 2003.
A risk-based approached is employed by the Hong Kong Financial Trading Authority in regulating and supervising banks and deposits companies in the Hong Kong. The prime legislation framework of banking regulatory and supervisory includes the Banks and Deposits Act of 2000 with the up-to-date issuance of statements of principles, policy and guidance to the industry.
As a leading risk-based regulator, the Hong Kong Financial Trading Authority conducts a timely supervision following the international standards set forth by the Basel Committee on Banking Supervision.
The Hong Kong Financial Trading Authority closely serves with other regulators, both international and local financial markets to ensure effective and efficient consolidated supervision. The supervision involves regular on-site visits and off-site surveillance. This includes review of prudential returns on both solo and consolidated basis and regular prudential meetings with the management of licensed financial institutions.
The Hong Kong Financial Trading Authority uses a risk evaluation model as part of its endeavor in assessing institutions in the banking sector. The Hong Kong Financial Trading Authority has also introduced a stress testing methodology and monitors on a regular basis a set of Financial Stability Indicators patterned on the IMF’s core and encouraged set.